Closing post
Time to recap….
The cost of UK government borrowing has risen as Keir Starmer’s crucial speech failed to dispel investor “jitters” in the bond markets over political instability combined with fears of rising inflation.
The yield, effectively the interest rate, on the benchmark 10-year UK government bonds (known as gilts) rose by just over eight basis points (or 0.08 of a percentage point) to 5% today.
The yield on 30-year gilts rose over 10 basis points to 5.68%, edging closer to the 28-year high of 5.78% last week when uncertainty about Starmer’s future as prime minister was intensifying.
In his speech, Starmer said he would fight any leadership challenge and would not walk away from his responsibilities after Labour’s drubbing in local elections in England and parliamentary contests in Scotland and Wales last week.
Analysts said that Keir Starmer’s speech had failed to reassure bond markets.
In other news
The Item Club have estimated the UK economy will shed 163,000 jobs this year, as the Iran war drive up energy costs and hits household disposable income.
Heathrow has reported a drop in passenger numbers in April, as the Middle East conflict hit flights.
Factory gate inflation in China has hit its highest in almost four years.
The German energy group E.ON has agreed to buy struggling UK rival Ovo in a deal that would create Britain’s biggest gas and electricity supplier by number of households served.
BoE's Woods sees 'significant disruption' from AI ahead
Bank of England deputy governor Sam Woods has warned of “significant disruption to come” for banking customers due to rapid developments in AI.
Speaking during a fireside chat at the UK Finance Growth Delivery Summit at Drapers Hall in London, Woods said the advent of AI models like Anthropic’s Mythos have notably increased the ability to find weaknesses in bank’s tech systems.
He said that would result in banks ramping up efforts to get ahead of bad actors, by “patching” their IT infrastructure more often.
While that may sound like positive news, patching is one of the most common causes of banking outages, leading Woods to warn of “significant disruption to come.”
(A reminder that customers of the UK’s nine largest banks and building societies suffered the equivalent of 33 days of outages - around 803 hours - between January 2023 and February 2025, according to the Treasury Committee. )
